News Corp. Legal Team in Turmoil

Recent departure of general counsel means added pressure

At a time when Rupert Murdoch’s News Corp. is facing the worst legal quagmire in its history, it finds itself with a legal team in turmoil. The company’s top lawyer, a man close to Murdoch, left only recently, and his replacement is, for now at least, just temporary. It’s a situation the company may not be able to afford.

On June 8—less than a month before the phone hacking scandal reached critical levels—News Corp. general counsel Lawrence “Lon” Jacobs announced his departure. Jacobs had been a part of Murdoch’s most trusted circle of advisors—his “praetorian guard”—for years, working for Murdoch’s longtime outside firm, Squadron, Ellenoff, Plesent & Sheinfeld, before coming in house, and playing an especially crucial role in Murdoch’s 2007 takeover of Dow Jones & Company and TheWall Street Journal. By some accounts, Jacobs was forced out as part of the James Murdoch-inspired putsch that has seen the exit of COO Peter Chernin and communications and marketing chief Gary Ginsberg, the team that had, many analysts believe, helped give News Corp. and Murdoch a better reputation in the U.S. business community.

Shortly after Jacobs left, News Corp. announced that Janet Nova would replace him, at least temporarily. Nova certainly seems to be taking her responsibility to protect her bosses seriously; when Murdoch was attacked by a protester wielding a shaving cream pie, it was Nova—not Wendi Murdoch—who blocked the pie. But even if that move helps make her new title permanent, she may never be able to have the kind of influence that Jacobs exerted. Murdoch prefers not to have women too close to him, telling intimates “they talk too much.”

Nova, 46, is the daughter of Sidney Lapidus, a former SEC attorney turned managing director of private equity investment firm Warburg Pincus LLC. Lapidus retired in 2007 and now spends his time serving on the boards of major corporations, including Neiman Marcus and Knoll, and cultural organizations such as the New York Historical Society and the American Jewish Historical Society. Nova followed closely in her father’s footsteps, attending both of his alma maters, Princeton University and Columbia University School of Law. After graduating from law school in 1992, Nova worked as an associate at white shoe law firm Simpson Thacher & Bartlett LLP. She left Simpson Thacher in 1997 for News Corp., where she served as associate general counsel of News America, a U.S. News Corp. subsidiary.

Meanwhile, only seven months before Lon Jacobs left the legal future of News Corp. hanging in the balance, Murdoch became enamored with powerhouse attorney cum New York City schools chancellor Joel Klein and hired him as an executive vice president. Klein signed up for the role primarily to advise the media mogul on News Corp.’s new venture into the educational marketplace. But the hacking mess has forced him to take on different responsibilities. On July 18, News Corp. announced that it had established a management and standards committee, an independent body outside of News International authorized to cooperate with investigations and inquiries, and that the committee would report directly to Klein.

It was a logical move. With what News Corp. is facing now, leaving Klein only to work on education issues would have been a waste, given his legal experience. His career in the field began in the early 1970s, when he graduated from Harvard Law School magna cum laude and scored coveted clerkships, including one with U.S. Supreme Court Justice Lewis Powell. He spent time in private practice as a litigator and started his own firm, specializing in health and constitutional law litigation on both the trial and appellate levels and arguing a number of cases before the U.S. Supreme Court. During the Clinton administration, he served as deputy White House counsel, and then, in 1997, was made an assistant attorney general, overseeing the Justice Department’s antitrust division, where he took on Microsoft.

What Klein lacks is business experience. Aside from a brief period he spent running U.S. operations for media corporation Bertelsmann, Klein has never worked in the business sector. However, lack of experience isn’t the kind of thing that deters Klein. Before he took over the largest public school system in the country, his background in education was limited to four months he spent teaching sixth grade math while on leave from Harvard Law in 1969.

Still, Klein’s influence on News Corp. may already be showing. It was clear during Rupert Murdoch’s parliamentary testimony that he had been coached by a litigator, and a good one. For all of the apologetic statements prepared by public relations professionals for Murdoch to reiterate during the proceedings, the constant denials of knowledge or responsibility came straight from the arsenal of a lawyer with Klein’s extensive background. And with his old colleagues at the Justice Department now reportedly preparing subpoenas, he may need to draw on more of that experience very soon.